Reshuffle the distribution to the growth · 2019-11-15 · Payments & GDS 15% - 25% 70%-85%...

Didier BRECHEMIERGlobal Head of Roland Berger Transportation, Tourism and Logistic

Monaco, November 3rd, 2019

Reshuffle the distribution to the growth

2191103 APG World Connect_Roland Berger_16x9_v15.pptx

1989FrancfortVienna

Roland Berger is a global consulting firm

#3 Germany

#2 Growth regions China & Russia / CEE

#3 Core markets in Western Europe

#5 World

Founded in Germany in 1967 by Roland Berger

50 offices across 35countries with more than

2,400 consultants

Source: Roland Berger

1969Milan

1976São Paulo

1986Madrid

1991Tokyo

1993BrusselsKyivPrague

1995Beijing

1998DetroitShanghai

2002Amsterdam

2006Manama

Düsseldorf

1982

Stuttgart

1987

BerlinHamburgLisbonLondonParis

1990

Bucharest

1992

Moscow

1994

BudapestZurich

1997Warsaw

2000

Zagreb

2003

ChicagoHong KongBeirut

2007

Munich

1967

1

2008CasablancaIstanbulTaipei

51

2010StockholmGothenburg Singapore

Doha

2009

DubaiKuala LumpurLagosDjakarta

2011

Offices today

2012BostonGuangzhouMontrealNew DelhiSeoul

2014BangkokPune

Mumbai

2013 2016ChennaiYangon

Nearly 220 Partners serving

~1,000 global clients


Today's agenda

CHow can airlines regain control of the distribution game?

How can distribution support passenger growth?A

B What are the impacts of distribution evolutions for airlines and the travel industry?

A. How can distributionsupport passenger growth?


Can airlines handle 2x more transactions by 2030?

34

8

20302014 2018

+7% p.a.

+5% p.a.

Airlines transactions [bn]

# of passengers transported

5

2014 2018

0.2

+126% p.a.

7 9

2014 2018

+5%.

34

70

2014 2018

+20%

5 6

20182014

+5%

Benchmark with other industries [bn; growth p.a. ]

# of Uber rides# of mobile connections

# of e-commerce orders

# of overnight visitor flows

Source: IATA, Uber, Amazon, Statista, Alibaba, Amadeus, Roland Berger

A How can distribution support passenger growth?


NDC: Better matching travelers' evolving expectations

Source: IATA, Roland Berger


Airline

GDS

Travel agentTMC | OTA |

IndependentTravelers

Fares

Via 3rd party

Schedule

Via a 3rd party

Availability

Ecommerce

engine

Today

Airline Offer

/ order

management

system

Content

aggregatorsGDS

| new entrants

Tomorrow

Post-NDC

Improved

offering

Improved

offeringNDC

NDC

Travelers: Access to a wider range of personalized offers and ancillaries (billions of combinations)

Travel agents: Increased product offering and revenue sources

GDS: Strong evolution of business model

Airlines: Stronger control on their offers, increased knowledge of customers and revenue streams

Main evolutions


One Order: aligning with e-commerce best practices


How can distribution support passenger growth?

Main evolutionsTravelers

Enhanced customer experience through simplified order management and registration

Increased ticket delivery efficiency due to simplified process

Airlines

Easier data reconciliation & enhanced data quality

Increased sales via better targeting enabled by simplified system & data analytics

Reduced costs due to higher level of automation

PNR

TKT

EMD

ONE Order✗

A


Unbundling will enable multiplication of personalized offers



Billions of potential combinations

Business

Friends

Couples

Family

Individual

New distribution partners

New parameters

Bundled offers

…

Experience, hotels, taxis…

Basic functions

Time

Airlines

Prices

Airports

A la carte servicesWifi, food, special needs…

Advanced options Luggage, seat…

…

Channel managementDemand management

Offer management


Airlines could be inspired from retail high standards


Offer Experience

Dynamic pricing

> Additional experience offering Aesthetic and friendly interface

> Adaptive marketing communication channels

> Dynamic pricing depending on customer profile & consumption habits

> A large range of products / services of different suppliers

> Personalized products / services, based on his tastes and habits


?

Personalization


Amazon: infinite combinations and multiple filters


Source: Amazon, Roland Berger

A wide range of suppliers / brands

Reviews

Various filters: Colors, materials, sizes, brands,

sellers, features, prices….

Fidelity program, delivery models…

11191103 APG World Connect_Roland Berger_16x9_v15.pptxSource: Alibaba, Taobao Roland Berger


Highly personalized recommendationsbased on various

vectors: account history, customer segmentation,

similar products…

Personalized recommendations by

type of promotionsStreaming integrated

Games

Alibaba: adaptive interfaces powered by strong data analytics

Travel products integrated



10+ data sets analyzed For highly personalized offering

> Creation of series based on consumer tastes (e.g. themes, duration…)

> Recommendation of films/series based on matching results

> # Users for a particular episode

> # Users for an entire series

> Time difference two episodes

> Behavior after a break: rewind, move forward or do not resume

> Attendance by day of the week

> Date, time and postal codes

> Type of equipment used

> Grades awarded and research conducted

> Navigation and scrolling habits

> Data in the films (actors, themes)

Source: Netflix, press, Roland Berger

Netflix leverages rich data to offer highly matching content



Source: Airbnb, Roland Berger

Airbnb now provides personalized experience suggestions


Mezi a one-stop personal assistant by chatbot for flights, hotels and restaurants bought by Amex USD 120M

Source: Mezi, Roland Berger

Flights Hotels Dining


B. What are the impacts of distribution evolutions for airlines and the travel industry?


Savings on distribution costs for airlines…

Source: IATA, Roland Berger, experts interviews

0%-5%

Payments & GDS

15% - 25%

70%-85%

Customer acquisition > Reduced GDS costs

> Reduced transaction / payment costs

> Reduced client acquisition costs / conversion rates

> Lower distribution costs due to channel evolution

~20 Bn

USD 5-6 Bnto 7-10 Bn

with full NDC

$ $

Savings

…. in 10 years, 20 years?

Total distribution costs [Worldwide; USD; 2018]

Others

Expectation

B What are the impacts of distribution evolutions for airlines?

17191103 APG World Connect_Roland Berger_16x9_v15.pptxSource: Roland Berger, experts interviews

93101

12%14%

2018 With NDC(Est.)

% of total revenues

> Highly segmented / personalized offers

> Consumption stimulation of ancillaries beyond standard ticket selling

> Channel diversification for ancillary offers via travel agents

… and an increase ancillaries revenue

+USD 16 bn

(c. +2%)

Revenue increase

Total ancillary revenues [Worldwide; USD; Bn; 2019]


…. and USD 8 -10 Bn with a smarter RM


Who else will benefit from distribution evolutions?



GDS NDC aggregator .com / DC tech provider Startups: Blockchain

Frontend provider Content aggregator platform provider

OBE provider Expense management provider

Corporate payment provider

Call center providerMid-office software provider

Back-office software provider

White-label website provider

Tour operatorsConsolidatorRetail chains franchiser

Startups:Rebooking

Startups: Repetitive booking

OTAsRetail travel agents

Startups: Messaging assistants

Meta-searchers Startups: Incentive/loyalty

Transportation operator

Traveler

Distribution & content layer

Process layer

Wholesale layer

Agent layer

Peer-to-peer transportation platforms

Startups: SME travel mgmt

GTMCs Local TMCs Traveler experience ?


Disruptions from tech giants?


Flights for your vacation in Thailand next month are booked.

- Alexa


Here are the best flights, experiences, hotels, cars selected based on your past vacation preference.

- Tmall Elf

Flights

Day 1, 12:00 Paris-Shanghai

Day 6, 23:00 Shanghai-Sydney

…..

Experiences

Day 2, The Bund

Day 7, Opera House performance at 19:00

…..

Total: 5,000 EUR

Best price before tomorrow


Amazon started a flight booking service in India


Source: Amazon, Roland Berger


Alibaba's Fliggy, one-stop travel App, joins forces with Alipay


Source: Fliggy, Roland Berger

One-stop for traveling> Flights

> Hotels

> Trains

> Bus

> Tourist sites

> ….

600Mactive payment users

Better understanding of travelers' preferences powered by data from Alipay

Increase of customers' retention by providing Fliggy'sadditional services

Booking integration


All players should accelerate and take actions at various levels



1Rethink offer & channel strategy

Invest in IT/ technology Gain data & analytics capabilities2 3

C. How can airlinesregain control of the distribution game?


What airlines should do?

New ambitious entrantsTraditional airlines ecosystem

?

C How can airlines regain control of the distribution game?


Airlines need to taking the right actions to secure their positions

C How can airlines regain control of the distribution game?


> Redesign channel strategy to prepare channel mix change and new partners

> Develop new distribution partners and challenge existing onesDistribution

IT

Pricing & Revenue management

Data & analytics > Define new data governance and architecture (including revenue management)

> Reinforce internal data resources & capabilities

> Develop data alliances with travel ecosystem players

> Redesign offer strategy and manage soaring number of potential offers / pricing

> Explore new opportunities thanks to unbundling of products, services & options

> Enhance digital customer experience to align with retail standards

> Redesign IT architecture and anticipate NDC impacts

> Replace legacy distribution systems

> Develop new technology suppliers / partners (in-house or externalized)

High-level strategy

> Build a vision to define the right position within the distribution "game"

> Develop tailored strategy to adapt distribution evolutions


Thank you for your attention!

Didier Bréchemier

Global Head of Transportation, Tourism, Logistics, Roland Berger

[email protected]

mailto:[email protected]

Reshuffle the distribution to the growth · 2019-11-15 · Payments & GDS 15% - 25% 70%-85%...

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Transcript of Reshuffle the distribution to the growth · 2019-11-15 · Payments & GDS 15% - 25% 70%-85%...